UPDATE -- Republic First Bancorp, Inc. Reports First Quarter Financial Results - Assets Increase 26% and Deposits Grow 23%

PHILADELPHIA, April 23, 2018 (GLOBE NEWSWIRE) -- Republic First Bancorp, Inc. (NASDAQ:FRBK), the holding company for Republic Bank, today announced its financial results for the period ended March 31, 2018.

	Three Months Ended
($ in millions, except per share data)	03/31/18		03/31/17		% Change
Assets	$	2,471.5	$	1,968.6	26	%
Loans		1,250.9		1,026.1	22	%
Deposits		2,123.5		1,720.5	23	%
Total Revenue	$	25.4	$	20.5	24	%
Income Before Tax		2.1		1.8	23	%
Net Income *		1.8		1.8	(1	%)
Net Income per Share	$	0.03	$	0.03	-	%

* Note:

Net income for the period ended 3/31/18 reflects a normalized provision for federal and state income taxes which was excluded from 2017 results due to an adjustment to the DTA valuation allowance recorded by the Company.

Vernon W. Hill, II, Chairman of Republic First Bancorp said:

“2018 is off to a tremendous start which can be seen in our first quarter financial results.  Assets, loans and deposits have all grown in excess of 20% year over year. And our revenue growth (24%) outpaced non-interest expense growth (20%) despite the ongoing investment required to execute our growth and expansion strategy. Our relentless commitment to extraordinary customer service and convenience through all delivery channels continues to deliver positive results throughout our footprint.”

Harry D. Madonna, President and Chief Executive Officer of Republic First Bancorp said:

“Momentum continues to build as the ‘Power of Red is Back’ expansion campaign rolls into 2018.  We are thrilled to begin our expansion into Bucks County with the opening of our newest store in Fairless Hills, PA during the first quarter. We are very excited to introduce our unmatched commitment to customer service and convenience to the Fairless Hills community and look forward to the opportunity to win over new FANS throughout this new market. We’ve also broken ground on future store locations in Gloucester Township and Lumberton, NJ which are expected to open by mid-year.”

Highlights for the Period Ended March 31, 2018

• Total deposits increased by $403 million, or 23%, to $2.1 billion as of March 31, 2018 compared to $1.7 billion as of March 31, 2017. On a linked quarter basis deposits grew $60 million, or 3%, when compared to December 31, 2017.
   
• Non-interest bearing demand deposits grew by $100 million, or 27%, to $464 million over the last 12 months.
   
• New stores opened since the beginning of the “Power of Red is Back” expansion campaign are currently growing deposits at an average rate of $27 million per year, while the average deposit growth for all stores over the last twelve months was approximately $19 million per store.
   
• Income before tax increased by 23% to $2.1 million for the three months ended March 31, 2018 compared to $1.8 million for the three months ended March 31, 2017. Total revenue grew by 24% while non-interest expense increased by 20%. The Company continues to open new stores and increase profitability despite the additional costs associated with the expansion strategy.
   
• Net income after tax was $1.8 million, or $0.03 per share, for the three month periods ending March 31, 2018 and March 31, 2017. The Company began recognizing a normalized provision for federal and state income taxes during the first quarter of 2018 after reversing its deferred tax asset valuation allowance during the fourth quarter of 2017. Prior year results were not impacted by an income tax provision.
   
• The Company converted $10.6 million of outstanding trust preferred securities to 1.6 million shares of common stock during the first quarter of 2018. This conversion will result in a reduction of interest expense of approximately $0.9 million on an annual basis going forward.
   
• There are twenty-three convenient store locations open today. The Company began its expansion into Bucks County, PA by opening its newest store in Fairless Hills during the first quarter. Ground has been broken on sites in Gloucester Township and Lumberton, NJ and are expected to be completed by mid-year. There are also several additional sites in various stages of development for future store locations.
   
• Total assets increased by $503 million, or 26%, to $2.5 billion as of March 31, 2018 compared to $2.0 billion as of March 31, 2017.
   
• Total loans grew $225 million, or 22%, to $1.3 billion as of March 31, 2018 compared to $1.0 billion at March 31, 2017.
   
• Asset quality continues to improve. The ratio of non-performing assets to total assets declined to 0.85% as of March 31, 2018 compared to 1.45% as of March 31, 2017.
   
• The net interest margin increased to 3.23% for the three months ended March 31, 2018 compared to 3.19% for the three months ended March 31, 2017.
• The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Oak originated over $79 million in loans during the three month period ended March 31, 2018.
   
• Meeting the needs of small business customers continued to be an important part of the Company’s lending strategy.  More than $21 million in new SBA loans were originated during the three month period ended March 31, 2018.
   
• The Company’s Total Risk-Based Capital ratio was 16.00% and Tier I Leverage Ratio was 10.09% at March 31, 2018.
   
• Book value per common share increased to $3.99 as of March 31, 2018 compared to $3.84 as of March 31, 2017.

Income Statement

The major components of the income statement are as follows (dollars in thousands, except per share data):

	Three Months Ended
	03/31/18			03/31/17				% Change
Total Revenue	$	25,434		$	20,525			24	%
Provision for Loan Losses		400			-			100	%
Non-interest Expense		20,102			16,804			20	%
Income Before Taxes		2,149			1,753			23	%
Provision (Benefit) for Taxes		372			(34	)		n/m
Net Income		1,777			1,787			(1	%)
Net Income per Share	$	0.03		$	0.03			-	%

The Company reported net income of $1.8 million, or $0.03 per share, for the three month periods ended March 31, 2018 and March 31, 2017.

Total revenue increased by $4.9 million, or 24%, to $25.4 million for the three month period ended March 31, 2018, compared to $20.5 million for the three month period ended March 31, 2017.  This increase is primarily attributable to higher interest income as a result of the strong growth in interest-earning assets over the last twelve months driven by the Company’s “Power of Red is Back” expansion program.

Non-interest income increased to $4.5 million for the three month period ended March 31, 2018 compared to $4.3 million for the three month period ended March 31, 2017. 

Non-interest expenses increased by $3.3 million, or 20%, to $20.1 million during the three month period ended March 31, 2018 compared to $16.8 million during the three months ended March 31, 2017. This increase was mainly caused by the increase in salaries and employee benefits as a result of annual merit increases along with increased staffing levels related to our growth strategy of adding and relocating stores. Occupancy and equipment expenses associated with the growth and relocation strategy also contributed to the increase in non-interest expenses.

The Company recorded a provision for income taxes in the amount of $372 thousand for the three month period ended March 31, 2018 compared to a benefit for income taxes in the amount of $34 thousand for the three month period ended March 31, 2017. The amount recorded during the first quarter of 2018 is a normalized provision reflective of the new corporate tax rate included in the Tax Cuts and Jobs Act of 2017. The benefit for income taxes recognized during the first quarter of 2017 was driven by an adjustment to the deferred tax asset valuation allowance that had been recorded by Company in previous years.  This valuation allowance was reversed during the fourth quarter of 2017.

Balance Sheet

The major components of the balance sheet are as follows (dollars in thousands):

Description	03/31/18		03/31/17		% Change		12/31/17		% Change
Total assets	$	2,471,464	$	1,968,588	26	%	$	2,322,347	6	%
Total loans (net)		1,244,262		1,016,962	22	%		1,153,679	8	%
Total deposits		2,123,451		1,720,512	23	%		2,063,295	3	%

Total assets increased by $502.9 million, or 26%, as of March 31, 2018 when compared to March 31, 2017.  Deposits grew by $402.9 million to $2.1 billion as of March 31, 2018 compared to $1.7 billion as of March 31, 2017. The number of deposit accounts has grown by 36% during the past twelve months. The strong growth in assets, loans and deposits has been driven by the addition of new stores and the successful execution of the Company’s aggressive growth strategy referred to as “The Power of Red is Back.”

Deposits

Deposits by type of account are as follows (dollars in thousands):

Description	03/31/18		03/31/17		% Change		12/31/17		% Change		1st Qtr 2018 Cost of Funds
Demand noninterest-bearing	$	464,383	$	364,278	27	%	$	438,500	6	%	0.00	%
Demand interest-bearing		826,726		629,583	31	%		807,736	2	%	0.57	%
Money market and savings		703,263		620,218	13	%		700,321	-	%	0.57	%
Certificates of deposit		129,079		106,433	21	%		116,738	11	%	1.15	%
Total deposits	$	2,123,451	$	1,720,512	23	%	$	2,063,295	3	%	0.49	%

Deposits increased to $2.1 billion at March 31, 2018 compared to $1.7 billion at March 31, 2017 as the Company moves forward with its growth strategy to increase the number of stores and expand its banking model which focuses on high levels of customer service and convenience and drives the gathering of low-cost, deposits. The Company recognized strongest growth in demand deposit balances, on a year to year basis as a result of the successful execution of its strategy.

Lending

Loans by type are as follows (dollars in thousands):

Description	03/31/18		% of Total		03/31/17		% of Total		12/31/17		% of Total
Commercial real estate	$	467,585	37	%	$	394,840	39	%	$	433,304	37	%
Construction and land development		118,607	10	%		78,636	7	%		104,617	9	%
Commercial and industrial		189,420	15	%		188,873	18	%		173,343	15	%
Owner occupied real estate		315,418	25	%		273,996	27	%		309,838	27	%
Consumer and other		78,834	6	%		67,146	7	%		76,412	7	%
Residential mortgage		81,048	7	%		22,652	2	%		64,764	5	%
Gross loans	$	1,250,912	100	%	$	1,026,143	100	%	$	1,162,278	100	%

Gross loans increased by $224.8 million, or 22%, to $1.3 billion at March 31, 2018 compared to $1.0 billion at March 31, 2017 as a result of the steady flow in quality loan demand over the last twelve months and continued success with the relationship banking model. The Company experienced strong growth across all loan categories.

Asset Quality

The Company’s non-performing asset balances and asset quality ratios are highlighted below:

	Three Months Ended
	03/31/18		12/31/17		03/31/17
Non-performing assets / capital and reserves	9	%	9	%	13	%
Non-performing assets / total assets	0.85	%	0.94	%	1.45	%
Quarterly net loan charge-offs / average loans	0.77	%	0.02	%	(0.01	%)
Allowance for loan losses / gross loans	0.53	%	0.74	%	0.89	%
Allowance for loan losses / non-performing loans	47	%	58	%	50	%

The percentage of non-performing assets to total assets decreased to 0.85% at March 31, 2018, compared to 1.45% at March 31, 2017.  The ratio of non-performing assets to capital and reserves decreased to 9% at March 31, 2018 compared to 13% at March 31, 2017 primarily as a result of decreases in non-performing assets over the last 12 months.

Capital

The Company’s capital ratios at March 31, 2018 were as follows:

	Actual 03/31/18		Regulatory Guidelines “Well Capitalized”
Leverage Ratio	10.09	%	5.00	%
Common Equity Ratio	14.87	%	6.50	%
Tier 1 Risk Based Capital	15.58	%	8.00	%
Total Risk Based Capital	16.00	%	10.00	%
Tangible Common Equity	9.29	%	n/a

Total shareholders’ equity increased to $234.1 million at March 31, 2018 compared to $218.3 million at March 31, 2017. Book value per common share increased to $3.99 at March 31, 2018 compared to $3.84 per share at March 31, 2017.

About Republic Bank

Republic Bank, a subsidiary of Republic First Bancorp, Inc., is a full-service, state-chartered commercial bank, whose deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC). The Bank provides diversified financial products through its twenty-three stores located in the Greater Philadelphia and Southern New Jersey market place.  Republic Bank stores are open 7 days a week, 361 days a year, with extended lobby and drive-thru hours providing customers with the most convenient hours compared to any bank in its market.  The Bank offers free checking, free coin counting, ATM/Debit cards issued on the spot and access to more than 55,000 surcharge free ATMs worldwide via the Allpoint Network. The Bank also offers a wide range of residential mortgage products through its wholly owned subsidiary, Oak Mortgage Company. For more information about Republic Bank, visit www.myrepublicbank.com.

Forward Looking Statements

The Company may from time to time make written or oral “forward-looking statements”, including statements contained in this release and in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein, including those related to our Five Year Strategic Goals, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.  For example, risks and uncertainties can arise with changes in: general economic conditions, including turmoil in the financial markets and related efforts of government agencies to stabilize the financial system; the adequacy of our allowance for loan losses and our methodology for determining such allowance; adverse changes in our loan portfolio and credit risk-related losses and expenses; concentrations within our loan portfolio, including our exposure to commercial real estate loans, and to our primary service area; changes in interest rates; business conditions in the financial services industry, including competitive pressure among financial services companies, new service and product offerings by competitors, price pressures and similar items; deposit flows; loan demand; the regulatory environment, including evolving banking industry standards, changes in legislation or regulation; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act; our securities portfolio and the valuation of our securities; accounting principles, policies and guidelines as well as estimates and assumptions used in the preparation of our financial statements; rapidly changing technology; litigation liabilities, including costs, expenses, settlements and judgments; and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.  You should carefully review the risk factors described in the Form 10-K for the year ended December 31, 2017 and other documents the Company files from time to time with the Securities and Exchange Commission. The words “would be,” “could be,” “should be,” “probability,” “risk,” “target,” “objective,” “may,” “will,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and similar expressions or variations on such expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Company pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company, except as may be required by applicable law or regulations.

Source:	Republic First Bancorp, Inc.
Contact:	Frank A. Cavallaro, CFO
	(215) 735-4422

Republic First Bancorp, Inc.
Consolidated Balance Sheets
(Unaudited)
						March 31,				December 31,				March 31,
(dollars in thousands, except per share amounts)						2018				2017				2017
ASSETS
	Cash and due from banks					$	21,927			$	36,073			$	25,119
	Interest-bearing deposits and federal funds sold						9,142				25,869				11,472
		Total cash and cash equivalents					31,069				61,942				36,591
	Securities - Available for sale						519,692				464,430				362,328
	Securities - Held to maturity						519,295				472,213				421,850
	Restricted stock						5,435				1,918				1,366
		Total investment securities					1,044,422				938,561				785,544
	Loans held for sale						25,653				45,700				25,098
	Loans receivable						1,250,912				1,162,278				1,026,143
	Allowance for loan losses						(6,650	)			(8,599	)			(9,181	)
		Net loans					1,244,262				1,153,679				1,016,962
	Premises and equipment						77,153				74,947				58,926
	Other real estate owned						6,966				6,966				9,944
	Other assets						41,939				40,552				35,523
	Total Assets					$	2,471,464			$	2,322,347			$	1,968,588
LIABILITIES
	Non-interest bearing deposits					$	464,383			$	438,500			$	364,278
	Interest bearing deposits						1,659,068				1,624,795				1,356,234
		Total deposits					2,123,451				2,063,295				1,720,512
	Short-term borrowings						93,915				-				-
	Subordinated debt						11,254				21,681				21,648
	Other liabilities						8,770				10,911				8,104
	Total Liabilities						2,237,390				2,095,887				1,750,264
SHAREHOLDERS' EQUITY
	Common stock - $0.01 par value						592				575				574
	Additional paid-in capital						267,313				256,285				254,403
	Accumulated deficit						(15,566	)			(18,983	)			(26,101	)
	Treasury stock at cost						(3,725	)			(3,725	)			(3,725	)
	Stock held by deferred compensation plan						(183	)			(183	)			(183	)
	Accumulated other comprehensive loss						(14,357	)			(7,509	)			(6,644	)
	Total Shareholders' Equity						234,074				226,460				218,324
	Total Liabilities and Shareholders' Equity					$	2,471,464			$	2,322,347			$	1,968,588

 

Republic First Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
						Three Months Ended
						March 31,			December 31,				March 31,
(in thousands, except per share amounts)						2018			2017				2017
INTEREST INCOME
	Interest and fees on loans					$	14,269		$	13,576			$	11,199
	Interest and dividends on investment securities						6,458			5,568				4,927
	Interest on other interest earning assets						172			265				61
		Total interest income					20,899			19,409				16,187
INTEREST EXPENSE
	Interest on deposits						2,598			2,222				1,602
	Interest on borrowed funds						185			320				366
		Total interest expense					2,783			2,542				1,968
	Net interest income						18,116			16,867				14,219
	Provision for loan losses						400			400				-
	Net interest income after provision for loan losses						17,716			16,467				14,219
NON-INTEREST INCOME
	Service fees on deposit accounts						1,175			1,084				846
	Mortgage banking income						2,186			2,619				2,421
	Gain on sales of SBA loans						992			1,063				688
	Loss on sale of investment securities						-			(85	)			-
	Other non-interest income						182			331				383
		Total non-interest income					4,535			5,012				4,338
NON-INTEREST EXPENSE
	Salaries and employee benefits						10,645			10,159				8,582
	Occupancy and equipment						3,470			2,947				2,890
	Legal and professional fees						759			953				681
	Foreclosed real estate						311			2,388				346
	Regulatory assessments and related fees						467			359				329
	Other operating expenses						4,450			4,816				3,976
		Total non-interest expense					20,102			21,622				16,804
Income (loss) before provision (benefit) for income taxes							2,149			(143	)			1,753
Provision (benefit) for income taxes							372			(2,881	)			(34	)
Net income						$	1,777		$	2,738			$	1,787
Net Income per Common Share
	Basic					$	0.03		$	0.05			$	0.03
	Diluted					$	0.03		$	0.05			$	0.03
Average Common Shares Outstanding
	Basic						57,100			56,988				56,824
	Diluted						58,370			58,360				58,049

 

Republic First Bancorp, Inc.
Average Balances and Net Interest Income
(unaudited)
		For the three months ended									For the three months ended									For the three months ended
(dollars in thousands)		March 31, 2018									December 31, 2017									March 31, 2017
					Interest									Interest									Interest
		Average			Income/			Yield/			Average			Income/			Yield/			Average			Income/			Yield/
		Balance			Expense			Rate			Balance			Expense			Rate			Balance			Expense			Rate
Interest-earning assets:
Federal funds sold and other
interest-earning assets		$	40,425		$	172		1.73	%		$	82,918		$	265		1.27	%		$	23,929		$	61		1.03	%
Securities			1,015,605			6,487		2.55	%			888,862			5,616		2.53	%			808,029			5,032		2.49	%
Loans receivable			1,235,124			14,365		4.72	%			1,171,771			13,743		4.65	%			1,008,329			11,338		4.56	%
Total interest-earning assets			2,291,154			21,024		3.72	%			2,143,551			19,624		3.63	%			1,840,287			16,431		3.62	%
Other assets			127,001									126,904									101,820
Total assets		$	2,418,155								$	2,270,455								$	1,942,107
Interest-bearing liabilities:
Demand non interest-bearing		$	431,234								$	421,841								$	329,015
Demand interest-bearing			893,530			1,257		0.57	%			776,203			945		0.48	%			620,090			608		0.40	%
Money market & savings			687,818			972		0.57	%			693,684			942		0.54	%			607,181			698		0.47	%
Time deposits			129,897			369		1.15	%			120,067			335		1.11	%			107,923			296		1.11	%
Total deposits			2,142,479			2,598		0.49	%			2,011,795			2,222		0.44	%			1,664,209			1,602		0.39	%
Total interest-bearing deposits			1,711,245			2,598		0.62	%			1,589,954			2,222		0.55	%			1,335,194			1,602		0.49	%
Other borrowings			40,552			185		1.85	%			23,621			320		5.37	%			53,138			366		2.79	%
Total interest-bearing liabilities			1,751,797			2,783		0.64	%			1,613,575			2,542		0.63	%			1,388,332			1,968		0.57	%
Total deposits and
other borrowings			2,183,031			2,783		0.52	%			2,035,416			2,542		0.50	%			1,717,347			1,968		0.46	%
Non interest-bearing liabilities			9,540									9,560									8,295
Shareholders' equity			225,584									225,479									216,465
Total liabilities and
shareholders' equity		$	2,418,155								$	2,270,455								$	1,942,107
Net interest income					$	18,241								$	17,082								$	14,463
Net interest spread								3.08	%								3.00	%								3.05	%
Net interest margin								3.23	%								3.16	%								3.19	%
Note: The above tables are presented on a tax equivalent basis.

 

Republic First Bancorp, Inc.
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
					Three months ended
	March 31,				December 31,				March 31,
(dollars in thousands)	2018				2017				2017
Balance at beginning of period	$	8,599			$	8,258			$	9,155
Provision charged to operating expense		400				400				-
		8,999				8,658				9,155
Recoveries on loans charged-off:
Commercial		-				1				36
Consumer		-				-				-
Total recoveries		-				1				36
Loans charged-off:
Commercial		(2,151	)			(19	)			(8	)
Consumer		(198	)			(41	)			(2	)
Total charged-off		(2,349	)			(60	)			(10	)
Net (charge-offs)/recoveries		(2,349	)			(59	)			26
Balance at end of period	$	6,650			$	8,599			$	9,181
Net charge-offs as a percentage of
average loans outstanding		0.77%				0.02%				(0.01%	)
Allowance for loan losses as a percentage
of period-end loans		0.53%				0.74%				0.89%

 

Republic First Bancorp, Inc.
Summary of Non-Performing Loans and Assets
(unaudited)
	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)	2018				2017				2017				2017				2017
Non-accrual loans:
Commercial real estate	$	13,322			$	13,973			$	10,140			$	17,703			$	17,695
Consumer and other		810				872				880				817				834
Total non-accrual loans		14,132				14,845				11,020				18,520				18,529
Loans past due 90 days or more
and still accruing		-				-				2,730				293				-
Total non-performing loans		14,132				14,845				13,750				18,813				18,529
Other real estate owned		6,966				6,966				9,169				9,909				9,944
Total non-performing assets	$	21,098			$	21,811			$	22,919			$	28,722			$	28,473
Non-performing loans to total loans		1.13%				1.28%				1.26%				1.76%				1.81%
Non-performing assets to total assets		0.85%				0.94%				1.07%				1.41%				1.45%
Non-performing loan coverage		47.06%				57.93%				60.06%				50.25%				49.55%
Allowance for loan losses as a percentage
of total period-end loans		0.53%				0.74%				0.75%				0.89%				0.89%
Non-performing assets / capital plus
allowance for loan losses		8.76%				9.28%				9.82%				12.39%				12.52%